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Posted on February 21st 2006 in Legal Articles

Law Making 101

Law Making 101

law n. 1. the principles and regulations established in a community by some authority and applicable to its people, whether in the form of legislation or of custom and policies recognized and enforced by judicial decision.
The Random House Dictionary of the English Language, Second Edition

Whether it is driving down the road, buying groceries or firing an employee, there is very little we do on a day-to-day basis that is not affected by the law. This set of rules, referred to as the law, regulates the affairs of individuals, businesses and governments. It establishes, for each of these groups, standards of acceptable conduct.

In Canada, there are two1 main sources for the rules which govern our actions and behaviours – statutory law and common law. Statutory law is a system based on the legislation enacted by the federal and provincial governments, whereas the common law is a system of law based primarily on judicial decisions.

Another important characteristic about the law is that it is not static, instead it is constantly changing, if not evolving. The articles that appear in Legal Issues often reflect this development. For instance the article, Terminating Independent Contractor Agreements, is a good example of how the courts are redefining the law in this area. We have seen in the two previous issues of the newsletter, with the law of limitations, how statutes change and sometimes very quickly.

What follows is a brief overview of how both statutory and common law work.

Statutory Law
One of the main responsibilities of government is to make laws. In Canada, by virtue of the Constitution Act, 1867, both the federal Parliament and provincial Legislatures have been given the power to enact legislation within the areas reserved to each.

There are essentially five steps involved in making a law.

The First Reading is the formal introduction of a bill to Parliament or the Legislature. At this stage, a bill is generally passed with no debate. Although a number of bills will be introduced during a Parliamentary session, depending on the public’s reaction, many will either be replaced or withdrawn at this stage.

During the Second Reading, a bill will be reintroduced and will be the subject of a full debate. At this stage, the bill will be approved in principle. In appropriate cases it may be referred to a committee for a detailed study or to have formal public consultation.

Amendments arising out of committee will be debated during the Third Reading. It is at this stage that a bill will receive its final vote, and if a majority vote for its adoption as presented, it will be passed.

The final stage is for the bill to receive Royal Assent and to be Proclaimed. Royal Assent is the formality of the signing of the bill into law by the Governor General or Lieutenant Governor, as the case may be. The statute will come into force on the day it is proclaimed to take effect. Often this is the day it is given Royal Assent, however a law may contain a provision that delays the coming into force until some future date. Delaying the coming into force provides those most affected by the new law, time to study it and to adjust to new requirements. It also allows the government time to make last minute amendments.

Ontario’s new law dealing with limitation periods provides a good example of this five-step process at work. On April 25, 2001, the Government of Ontario introduced Bill 10, the Limitations Act 2001. Bill 10 replaced Bill 163, which had been introduced in December 2000 but which did not complete the legislative process, i.e. it died at first reading. Bill 10 was subsequently replaced by Bill 213, the Justice Statute Law Amendment Act, 2002, which among other things creates a new limitations act. The Justice Statute Law Amendment Act, 2002 received Royal Assent in December 2002 however, the Limitations Act, 2002 will not be proclaimed in force until January 2004.

The Common Law
While statutes are the major source of law in Canada, the common law is also an important source. Common law is essentially a group of legal rules and exceptions that have been developed by the courts over hundreds of years. As judicial decisions are rendered a body of case law is created for different areas which then act as a guide in future cases. As new fact situations arise, existing principles will be broadened or contracted and exceptions will be developed by the judges and courts of appeal who hear the cases.

In order to better illustrate how common law develops we will consider a topic already touched upon in this newsletter – termination of independent contractor relationships.

Independent contractors agreements have traditionally been interpreted according to the usual principles that apply to commercial contracts. In other words the contract is the law that governs the parties’ relationship and unless there is ambiguity or unfairness, the courts will generally respect and uphold the contract. And when the employer puts an end to the relationship with the independent contractor, the latter cannot normally sue for damages.

However, more recently some courts, including some appellate courts, have begun to characterize certain employer/independent contractor relationships as being more akin to an employer/employee relationship. They have created an “intermediate” independent contractor category to avoid the normal “all or nothing” result. They have begun to provide new rules and guidelines for determining the nature of the relationship as well as for determining damages to be awarded in such cases, thus contributing to the expansion of the common law in this area.

Making laws is not easy and it is sometimes difficult to keep track of what is happening in the world of law. We hope that Legal Issues helps you stay abreast of the current happenings. 1

1Two other important sources of law, which are not discussed in this article, are the Canadian Charter of Rights and Freedoms and the Constitution Act, 1867. These two documents can be thought of as “super statutes”. Like all statutes they were passed by Parliament, however, unlike other statutes they cannot be changed at all without the use of a complicated amending formula.